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Insurance lapse: Discover what it could mean for you and your auto coverage

Added November 22, 2021

What is a car insurance lapse?

A lapse in car insurance is any time period—even as little as one day—in which you have a registered vehicle that’s not covered by car insurance. An insurance lapse can lead to increased coverage rates or reduce your chances of being accepted by some insurance carriers.

Missing payments resulting in a car insurance lapse is more common than you might think. It happens, and you’re not alone. We’re here to help you get back on the road quickly and legally, while also helping you understand and avoid penalties like having your license revoked or worse—jail time in states like Montana and Kentucky if you’re caught driving without insurance.

What to do if your car insurance lapses

A truck driving down a dirt road A truck driving down a dirt road

If your car insurance lapses, the best course of action is to immediately contact your car insurance carrier and resolve the issue by restarting it. In most cases, if you act quickly, the matter can be resolved instantly and with minimal penalties for you and your record. 

However, make sure you don’t drive your vehicle until your coverage is restarted—the consequences of doing so can be severe.

Get an auto insurance quote. Even if you've lapsed, we can help.

The consequences of an insurance lapse

  • Not having insurance coverage: The reason it’s important to resolve a lapse in coverage immediately is that, by definition, you aren’t covered by car insurance. Not being insured exposes you to numerous risks, and in states like Iowa, those risks can include:
    • Being personally liable for any damages you may cause while operating your vehicle during this time
    • Your license being revoked
    • Your car being seized
    • Fines
  • Rate increases: Once you restart your policy, your premium may be higher depending on how long you go without coverage. If you miss a payment by even one day, your insurer may charge a flat late fee due to the risk involved with a potential lapse in coverage following your grace period. Worse yet, if your insurance does lapse, you’ll likely be considered a high-risk driver and have a more expensive premium once your insurance is restarted.
  • Difficulty resuming coverage: After an insurance lapse, you might be considered a high-risk driver by your insurer, which could lead to you needing to reapply for a new, more expensive plan. Depending on the circumstances of your lapse in coverage, some insurers might even view you as too high of a risk and deny coverage to you altogether.
  • Impact on your driving record: In many states, such as California, auto insurance companies may be required to notify the Department of Motor Vehicles about your lapse in coverage, which could lead to it being noted on your driving record.

Avoid insurance lapses by making payments on time

There are several steps you can take to help avoid missing payments.

  • Set up automatic payments for your insurance premiums. This can be done by logging into your account, or via the Dairyland mobile app.
  • Routinely check to ensure the card and account information on your file is current to prevent any errors that might stop your autopayment from completing successfully.
  • Add a reminder on your calendar or phone before each due date if you don’t use autopay. This is a good way to help avoid late payments.

Car insurance lapse grace period

While auto insurers typically don’t offer an actual grace period, most have policies available that won’t cancel as soon as you miss a payment. These policies cancel after a period of time—often 10 to 15 days after a missed payment.

Many states have laws that protect drivers from having their insurance policies canceled without advance notice from the provider. In most cases, your insurance provider will notify you when you miss a payment and let you know if your coverage has already expired or if you have time to make a payment to avoid a lapse.

Whether or not your insurance does lapse, missing a payment will likely incur late fees, and you’ll still need to pay for the time that you’re insured after the missed a payment.

The details of your insurer’s missed payment notification policy are in your contract. Reviewing those details can help ensure you won’t lapse.

Get a quick quote. Drive protected.

Frequently asked insurance lapse questions

  • How long does an insurance lapse stay on my record?

    If you’re convicted of driving while uninsured in states like Missouri, several points could be added to your driving record for multiple years, which can make you a high-risk driver and likely increase your insurance rates.

    How a lapse in coverage affects your insurance varies by state. An insurance lapse will eventually come off your record, typically within a few years. However, your insurance provider might have its own designated time period following a lapse during which your premium may be impacted.

    If your rates increase after a lapse in coverage, you can speak to your insurance carrier to find out if the increase is temporary, and when it will go back down. You can also explore other ways to lower your car insurance rates.

  • What if my car insurance lapses and I have an accident?

    After an insurance lapse, you’re not insured. As such, if you cause a crash, you’ll likely be held liable for any bodily injuries and property damage. In states such as California, you could face fines, have your license suspended, and have your vehicle impounded. In some states, like Montana, your first offense of driving without insurance can even result in a misdemeanor.  

    If you’re found to not be at fault in an accident, the laws vary by state and the accident, but not having insurance coverage may reduce your chances of receiving compensation in states such as Louisiana.

    Have questions about how to restart your insurance after a lapse? Give us a call.

  • How do I restart my insurance after a lapse?

    After a lapse in coverage, your provider may allow you to reinstate or reapply for a car insurance policy. As a high-risk driver, it’s important to review your policy and understand your coverage. You may need an SR-22—a certificate of insurance that proves you carry car insurance—which Dairyland files for free as part of your policy.

    Life happens, and so do car insurance lapses. And while the consequences can be severe, there are ways to avoid lapses. We’re here to help, with tools like the Dairyland mobile app which allows you to set up bill alert reminders, access and update your account information, and make payments from anywhere at any time.

Related links

Find out the minimum car insurance requirements you need to stay covered. If you’re still not sure, contact us and we can help.

When reinstating your car insurance after a coverage lapse, you may need an SR-22 to prove you’re insured.

 

The general information in this blog is for informational or entertainment purposes only. View our blog disclaimer.

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